Like Patek Philippe whose famous tagline reminds us that “You never actually own a Patek Philippe, you merely look after it for the next generation”, watch brands are frequently at pains to emphasise the intrinsic quality and enduring nature of their products: properties which should, one would imagine, encourage them to be present at every stage in their watches’ existence. And yet brands continue to ignore the vast market for second-hand timepieces, or pre-owned to give them their more euphemistic name. The 19th Symposium of Watch Marketing, held December 3rd in La Chaux-de-Fonds, shed at least partial light on the mysteries of the second-hand market, home to a growing number of players. The different speakers considered the paradoxes and ambiguities of two mutually exclusive worlds, with luxury retailers of new timepieces on one side and, on the other, the second-hand network that has made its niche online.
Brands opt out
Sales of second-hand luxury goods have exploded in recent years, and the pre-owned watch market alone is worth several billion dollars a year worldwide. The three main reasons are growth in the luxury market in general over the past two decades; the arrival of new technologies; and changing purchasing habits. The number of watches changing hands through private sales, auctions, loans, swaps or hire services has taken off, boosted by the internet and its seemingly limitless ability to link buyers and sellers. The market is further buoyed by the sheer quantity of new products sent out into the world each year: in 2014, Switzerland exported more than five million watches with an individual value of CHF 500 or more.
Yet as Catherine Bourdin-Mougel from the Doubs Chamber of Commerce explains, brands have failed to pick up on this aspect of their business. This lack of interest, or lack of possibility, is in large part due to the fundamentally different logics that govern these two sides of watch sales: on the one hand a strict pricing policy that excludes any form of discount and, on the other, the unpredictable law of supply and demand. As Catherine Bourdin-Mougel concludes, “other players have filled the gap.”
Playing on words
Cresus is one of them. The company, which is based in Lyon, is France’s biggest seller of second-hand watches, with 43 staff, 50,000 items sold since its launch in 1993, and turnover of €15 million in 2015. It operates nine stores and a website, ensuring both an online and offline presence. “There is an entire ritual around buying a watch,” comments Christian Odin, founder of the firm. “A customer begins by asking around, then goes online, and ultimately visits a retailer. Our role is to accompany him each step of the way, on blogs, on Facebook, and on our website which gets 10,000 visits a day.” Someone else will always want the watch you no longer wear, which is where Cresus steps in. The company takes care to preserve brands’ image and protect their sales network. How? By playing on words!
Because despite being a perfectly legitimate enterprise in a market economy, Cresus is walking on eggshells. First of all, it exists outside authorised networks and therefore cannot be controlled by the brands, the vast majority of which refuse any form of contact. “We’re not on speaking terms with all the brands,” ventures Christian Odin. “We’re opening doors.” With ludicrous consequences: Cresus’s watchmakers aren’t trained by the brands, aren’t supplied with parts, and don’t have access to after-sales services. Secondly – and this is where the ambiguity of the situation comes to the fore – Cresus doesn’t source all its products from individuals who wish to part with their watch; it also buys redundant stock from retailers and sometimes even the manufacturers themselves. “Although woe betide us if we label it as new!” Odin declares. “We don’t offer discounted prices. The watch is cheaper because it’s second-hand. End of.”
The power of auction
Auction houses are the other major players in the pre-owned market. Auction sales first appeared in Ancient Rome as a means of dispersing the spoils of war, then took their modern form with the creation of Sotheby’s in 1744 and Christie’s in 1766. A couple of hundred years later, in 1974, Antiquorum in Geneva became the first auction house to specialise in timepieces.
Since then, this channel has grown into a serious reference with the capacity to influence the market for new products. Whereas auction sales once comprised only vintage clocks and pocket watches, a modern-day auction will be 95% wristwatches of recent and, in some cases, very recent release. The most spectacular results are for Patek Philippe, which sets record prices on a regular basis, although it did benefit from a push in the right direction on the road to saleroom fame: on November 14th 1989, Antiquorum organised the first ever single-brand watch sale. Crossing the block that day were 231 Patek Philippe wristwatches, including one which French actor Fernandel had bought for himself in 1945. It wasn’t long before prices were heading skywards. The Manufacture was thus the first to encourage sales of its second-hand watches as a means of adding to its aura. It’s worth noting that Patek Philippe holds the all-time record for a watch at auction, for a pocket watch that fetched $24 million in Geneva, in November 2014.
Influencing new product prices
According to Kim Claes, from the Graduate School of Business in Seoul, and Ryan Raffaeli, from Harvard Business School in Boston, “Brands can appropriate part of the value attained by their watches at auction.” In a study titled “Analysis of the Pre-Owned Watches Market through the Antiquorum Database”, the two students reviewed 174 sessions staged by Antiquorum between 1984 and 2012 and showed that 95% of lots sold above their low estimate and 5% went for more than their high estimate. They concluded that, for the latter category, “brands could increase the price of their new products by 4% to 25% without losing customers.” While high-profile sales in ritzy hotels attract an audience of wealthy collectors, and even speculators in general, the internet is once again where the vast majority of lots change hands. Online platforms, and now the traditional auction houses themselves, offer a year-round supply of tens of thousands of recent and vintage watches for sale.
Is the expanding second-hand watch market detrimental to the brands? No, affirms Christian Odin, provided everyone plays by the rules and brands are more closely involved. Invited for a round-table discussion, Jean-Marie Schaller, CEO of Louis Moinet, one of the smaller brands, gave a neat summing-up of the situation: “I’ve been able to acquire at auction some exceptional timepieces which Louis Moinet made in his lifetime, not least the first ever chronograph in the history of time measurement, and this has undoubtedly contributed to the brand’s renown. However, I’ve also come across certain of my watches online, either stolen or gifted then resold, at a quarter or a fifth of their value. Something I of course find prejudicial.”